USD strengthens on Iran war fears, US-Israel military cooperation

The US dollar surged across major pairs as reports emerged of potential US military involvement in the Iran-Israel conflict, with Israeli media suggesting strikes could begin within hours. USD/JPY climbed 0.5% to test 157.20, while EUR/USD dropped 0.4% to 1.0420, reflecting intense safe-haven flows. Israeli Channel 12 reported possible US participation in strikes against Iranian nuclear facilities, following Trump's NSC meeting conclusion. Iran has threatened retaliation against US bases if America joins the conflict, escalating geopolitical tensions significantly. The dollar index (DXY) jumped to 106.80, its highest level in two weeks, while Treasury yields declined as investors sought safety in US government bonds. Near-term USD strength appears likely to persist as uncertainty dominates, with key resistance for USD/JPY at 157.50 and support for EUR/USD at 1.0400. Traders should prepare for heightened volatility and potential gaps if military action materializes.